Oil Prices Rise as Russia Promises to Aid Syria in Case of Attack

The statement made by Russian President Vladimir Putin to help its long-time ally in the case of an attack, caused global oil markets to tremble, and saw West Texas intermediate crude rise for the second day in a row. Traders became fearful that such a declaration of intent is a sign of increasing tensions, and an indication that some form of conflict with the potential to disrupt Middle East oil exports, is imminent.

Ever since it alleged proof has arisen claiming that President Bashar al-Assad was responsible for the chemical attacks against civilians living on the outskirts of Damascus, US President Barrack Obama has been trying to gain support for a military strike into Syria.

Delays on such an action, due to a lack of foreign support and Obama’s desire to seek approval from Congress before making any calls to arms, have prevented oil prices from soaring excessively. Congress will meet to discuss a plan of action for Syria on the 9th September, at which point oil markets could begin to react more violently.

Kyle Cooper, the director of commodities research at IAF Advisors, explained that “the involvement by Russia could escalate things and take it beyond Syrian borders. The situation in Syria is fluid and that has the market concerned.”

The IEA claims that the Middle East produced around 35% of all oil for the first quarter of this year, and Iraq and Iran, two countries close to Syria, contain nearly 20% of OPEC output capacity. Any disruption to the oil production of these countries could devastate the global oil market, forcing prices to rocket.

Bloomberg writes that WTI for October delivery rose $1.73 (1.6 percent) to $110.10 a barrel on the New York Mercantile exchange, and prices for the week have risen 2.3 percent.

Brent deliveries for October rose $0.91 (0.8 percent) to $116.17 a barrel on the ICE Futures Europe exchange.

WTI experienced a larger price increase after the US reported that inventories at Cushing had fallen by 1.83 million barrels over the last week to just 34.8 million, the lowest level since February 2012.